DOGE Facing Major Risks despite Elon Musk’s $1B Boost – Crypto News

Dogecoin price action has stabilized above the $0.32 mark over the past week. A recent DOGE-related announcement from Elon Musk could potentially spark a bullish start to February 2024.

Dogecoin (DOGE) Struggles to Hold Above $0.30 as TRUMP Token Encroaches on Market Share

Dogecoin (DOGE) has faced intense bearish pressure from multiple market catalysts, most notably the launch of Donald Trump’s official token on Inauguration Day. Beyond dominating media traction, the $TRUMP token has also secured significant short-term market dominance.

According to Coingecko, Dogecoin’s price declined by 4.3% on the day, mirroring the broader market sentiment, as the total crypto sector saw a 7.8% downturn. 

Other major memes coins also faced price corrections, as crypto markets took a breather following a week packed with major U.S. economic events, including the DeepSeek vs. OpenAI legal battle, tariff discussions, and Federal Reserve policy updates.

While the ongoing DOGE price decline aligns with overall market trends, TRUMP token’s growing market share appears to be the key factor suppressing DOGE’s momentum in the last week of January.

Dogecoin currently holds a market cap of $46 billion, while TRUMP token sits at approximately $4 billion. Trading volume data highlights TRUMP token’s growing influence, as it recorded $3.1 billion in 24-hour trading volume compared to DOGE’s $1 billion.

Trading Volume to Market Cap Ratio (TVMC) and Its Impact

The TVMC ratio indicates the level of liquidity and market activity surrounding a token. TRUMP token’s high TVMC ratio suggests a more attractive trading environment, particularly for large investors. Higher trading volumes enable the execution of large transactions with minimal slippage, making TRUMP a compelling alternative for high-frequency traders.

Additionally, the shift in trader sentiment underscores a growing trend of investors pivoting away from legacy memecoins in favor of newer, high-momentum assets. The increasing adoption of AI-driven trading and trend-based speculation further reinforces this migration.

DOGE Traders Mount $22M Support  as Musk Announces $1B in Savings

Trump signed the bill creating D.O.G.E. department into law on January 21, less than 24 hours after taking office. The announcement initially spurred positive market sentiment, propelling Dogecoin above the $0.40 mark, before intense profit-taking ensued. 

At the time of writing, Dogecoin spot prices have dropped by another 4.3% on Saturday, in line with a broader 7.8% memecoin market decline, signaling further downside risks. However, trading metrics in the Dogecoin derivatives market indicate a strong intent to defend the $0.30 support level.

Coinglass’ liquidation map provides insight into the distribution of leverage in active perpetual futures contracts. The data reveals that DOGE short positions, totaling $67 million, currently outpace long positions of $57 million, confirming a prevailing bearish sentiment.

However, a closer examination of the chart shows that bulls have concentrated over $22 million in active long positions around the $0.315 mark, which accounts for nearly 50% of the total leverage deployed.  

If Dogecoin’s price dips below this level, these traders face the risk of forced liquidations. To prevent such an outcome, market participants holding these positions may engage in short-covering purchases in the spot market, supporting price stability.

With Elon Musk’s latest announcement highlighting the D.O.G.E. department’s success in saving Americans $1 billion per week, positive sentiment around Dogecoin could build momentum. If this narrative gains traction, DOGE could witness renewed interest, potentially catalyzing a bullish resurgence in the near future.

Dogecoin Price Forecast: $0.40 breakout unlikely as Elliott Wave Signals Reversal 

Dogecoin’s price action has consolidated above the $0.30 mark, but technical indicators suggest a pivotal moment for traders. The Elliott Wave pattern on the chart highlights a completed corrective wave (a)-(b), indicating that DOGE could be forming a base for the next leg of price discovery. While price action remains in a downward channel, the contraction in volume suggests waning bearish momentum, which often precedes a bullish reversal.

The Commodity Channel Index (CCI) is deeply oversold at -119.50, well below the -100 threshold, signaling potential exhaustion in selling pressure. Historically, DOGE has rebounded from similar oversold levels, making this a key area to watch for bullish divergence. However, the failure to reclaim the -50 mark would indicate continued weakness, reinforcing the possibility of further downside.

On the bearish side, the dotted trendline projecting lower support levels hints at potential downside targets near $0.20 if selling persists. However, if bulls can defend the $0.30 region and trigger short-covering, a breakout above $0.35 could confirm a trend reversal, reigniting momentum toward $0.45.

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Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.